Financial projections (“pro-forma financials” or “pro-formas”) are a representation of what you think your company’s financial statements will look like in the future. Creating these documents is often an arduous task for the entrepreneur because it requires him/her to make many assumptions and to build a model based on those assumptions and industry research. Further, [...]
This is the bedrock of your pro-formas. To begin, you will estimate your revenue (also called sales). This is simply the amount of cash you are bringing into the company in exchange for the goods and services the company provides. Do you sell t-shirts for $10 each? Then the revenue or sales for each is [...]
Early stage companies are nearly impossible to value. There are so many factors that are simply unknown, that traditional valuation methods just don’t apply. However, it is important for any entrepreneur to understand the ideas behind valuation and why companies are given the value they are. Realize that once you know what gives a company [...]
Most startups are founded with money from the entrepreneur’s family, friends, or significant others. This round of funding is commonly referred to as the “Friends and Family” round (although some professional investors change it to “Friends, Family, and Fools” to reflect the lack of sophistication most seed-stage investors have). The Friends and Family (”F&F”) round [...]
Most people have heard the term Angel Investor, but many don’t know what the term really means, and fewer still know how to find one. Angel investors are wealthy individuals who actively invest in (typically) very early stage companies. They often have had success building their own business and are looking for a way to [...]
